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Author: trimaran One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: IRA beneficiaries and family harmony Date: 7/1/1998 5:57 PM
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I have a rather technical question, well actually a couple of them that are related and I have been lurking on this board quite a bit. I value the opinions, so here goes.
I am forming a new blended family - I've got kids, she's got kids. A very large percentage of my assets are in IRAs and I have my kids now listed as beneficiaries. She has significant assets of her own, but not much in tax deferred plans. When I get married I want to have my wife be able to benefit from the IRAs if she survives me, but I like the idea of my kids being the beneficiaries (extending the lifetime for calculating payout and the fact that the IRA passes outside a will that way). Can I set up a trust with the IRAs as the corpus where my wife has a right to the income or growth within the IRAs while my kids get the balance that was there at the time of my death after she dies? Will this cause the IRS to jump for joy because I am running afoul of the wonderful tax code we all love and cherish?

If I can not do it this way, does anyone have suggestions as to how to accomplish the same sort of goal without getting into tax trouble or giving the IRS a lot more bucks than I have to?

We are both relatively young - not quite old enough to start tapping into the IRAs but not so far away either.

Thanks in advance.
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4118 of 75340
Subject: Re: IRA beneficiaries and family harmony Date: 7/1/1998 6:33 PM
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Greetings, Trimaran, and welcome.

<<When I get married I want to have my wife be able to benefit from the IRAs if she survives me, but I like the idea of my kids being the beneficiaries (extending the lifetime for calculating payout and the fact that the IRA passes outside a will that way). Can I set up a trust with the IRAs as the corpus where my wife has a right to the income or growth within the IRAs while my kids get the balance that was there at the time of my death after she dies? Will this cause the IRS to jump for joy because I am running afoul of the wonderful tax code we all love and cherish?>>

Nope. If you leave the IRAs to a trust, they become immediately taxable. And yes, the IRS would love for you to do that.

<<If I can not do it this way, does anyone have suggestions as to how to accomplish the same sort of goal without getting into tax trouble or giving the IRS a lot more bucks than I have to?>>

You should see a skilled estate planning attorney to accomplish this goal. There are several lines of attack, and that person is versed well enough on the laws of your state and the U.S. to devise a plan that will do what you wish.

Regards....Pixy

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